Solar energy powers South African economy

PARIS – The solar energy market in South Africa has moved up a gear in recent months, with a number of projects emerging from the country. One example is Kamstrup A/S, a Denmark-based smart metering solutions provider, with the establishment of Kamstrup South Africa (Pty.) Ltd. in Pretoria.

South Africa will emerge as a PV market to watch in 2013, according to IHS iSuppli in a recent report, entitled Top-10 solar market predictions for 2013. South Africa will expand from virtually no solar installations to a generation capacity of several hundred megawatts, noted IHS. PV additions will mainly stem from the tenders awarded in 2012.

In a discussion with EETimes, Kamstrup's executive Gert Skriver describes the positive business environment in South Africa and the demand for intelligent energy and water management solutions.

EETimes: Can you describe the South African smart energy market and Kamstrup's early experience in the country?

Kamstrup: The South African market is dominated by Eskom as sole energy supplier selling bulk energy to local resellers, e.g. companies and municipalities that have from a few to tens of thousands customers.

Resellers often find themselves caught up between the energy supplier and their customers for several reasons. Resellers must estimate an annual amount of energy for which they have to pay Eskom. If (industrial) consumers exceed the estimated maximum demand, reseller must pay penalty to Eskom, and if consumers don’t pay up or even steal energy (a common problem), reseller doesn’t get his money back.

On top of that Eskom has a very complicated tariff system, making it very difficult for consumers to estimate their energy bill.

Kamstrup’s customers are resellers. Resellers are very positive towards smart metering technology, because it helps securing correct and fair billing and preventing tamper. An early smart metering project in the city Potchefstroom, where the university acts as reseller to a shopping center, changed a budget minus of 40,000 Rand into a budget plus of 15,000 Rand, simply because smart metering was able to lay a detailed consumption map based on 48 daily meter readings (compared to formerly one monthly meter reading). This frequency of meter readings makes it possible to give an accurate estimate of consumption and thus to find the right tariff.

South Africa is a tough country for energy suppliers and consumers alike: energy theft is a huge problem, voltage quality is fluctuating, and social unrest often makes it difficult for meter readers to enter into certain areas. Therefore tamper detection, voltage quality measuring, smart disconnect and remote meter reading are important features in a smart metering system for the South African market.

Kamstrup’s first experiences are that our smart metering solutions fill out an enormous gap in South Africa. A growing middle class and industry demand still more energy, and they want stable prices and a stable supply. Smart metering strengthens demand side management for the benefit of all parties.

EETimes:Can you outline the adjustments that the company had to make (technology- and businesswise)?

Kamstrup: We go in with the technology we have. Many energy suppliers also supply water, and they are therefore also interested in our water meters that are able to communicate with our electricity meters. Actually, we enter the South African market with the whole palette of meters and communication.

EETimes: Could you outline future plans in South Africa and the company’s strategy to strengthen presence in the country?

Kamstrup: Kamstrup has worked with great success with local companies and business partners for a couple of years and will continue to do so. The office opening in Pretoria means that we are now permanently present and therefore able to maintain an even closer cooperation. Teaming up with local partners is extremely important for a new company in order to understand cultural differences. A local presence will strengthen the dialogue with the customers, and they will experience that we are there for good. Many customers have had bad experiences with companies that sell equipment and then leave quickly. Kamstrup has been in the metering business for more than 60 years and we don’t leave. On the contrary, we expect to hire more people as the customer base will grow.

EETimes: Kamstrup noted that it considers doing smart metering business in other parts of Africa. Which parts? What would be the strategy and timeframe? Would there be new challenges and adjustments?

Kamstrup: Kamstrup considers South Africa as a portal to Africa. But not all countries are equally relevant. First of all, we look for markets similar to South Africa: business friendly and stable administrations. Kamstrup has a clear CSR-policy and has joined the UN Global Compact with a goal to work against corruption and in respect of human rights. There is no particular timeframe for other African countries. South Africa is a big country with a huge potential.